The real estate sector is expecting transformative measures that correspond with the government’s broader objectives of economic growth and ensuring housing accessibility for all.
The soon-to-be-announced Union Budget 2025-26 presents immense potential for India’s real estate sector, providing a chance to tackle long-standing challenges and explore new avenues of growth. Leaders from major industry organisations have expressed their hopes for impactful initiatives that resonate with the government’s overarching objectives of economic growth and the vision of Housing for All.
Stakeholders are calling for policy reforms aimed at improving affordability, simplifying regulations, and encouraging sustainable practices. These reforms include tax incentives for homebuyers, the promotion of Real Estate Investment Trusts (REITs), and the long-awaited designation of ‘industry status’ for the real estate sector.
Experts say that the upcoming budget offers a significant opportunity to address the challenges related to rising borrowing and construction costs. “Measures such as adjusting the affordable housing price threshold to reflect the escalating costs of urban development, increasing the tax deduction limit for home loan interest, and introducing tax incentives for Real Estate Investment Trusts (REITs) could offer vital support to homebuyers and draw in new investors. Granting the long-sought ‘infrastructure’ status to the real estate sector can streamline regulatory processes, promote growth, and improve access to affordable financing, thus supporting the government’s goal of realizing ‘Housing for All’, said Nitin Khandelwal, Founder, OneNDF, a loan marketplace.
Additionally, refining Goods and Services Tax (GST) rates and encouraging the implementation of environmentally friendly building practices will aid in creating a sustainable, technology-oriented growth trajectory. These progressive measures within Budget 2025-26 could significantly strengthen the real estate sector, thereby driving economic progress.
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For millions of Indians, the dream of owning a home remains elusive as property prices in cities like Mumbai and Delhi rose by 13–30% in 2024, according to Anarock Research.
To address the issue of affordability, Budget 2025 could implement strategies aimed at boosting urban housing developments and increasing financial support for rural housing programmes. According to experts, the budget could potentially raise tax deductions on home loans, expand initiatives for affordable housing, and provide incentives for developers to lower housing expenses for middle-class households.
The Affordable Rental Housing Complexes (ARHC) scheme, introduced for the benefit of migrant workers, is likely to receive increased attention. Strengthening collaborations between the public and private sectors could streamline the construction process and provide more affordable rental housing options.
With an ambitious goal of delivering 1 crore urban homes under PMAY-Urban 2.0, Budget 2025 must tackle the challenges posed by escalating construction costs and delays in housing projects to transform affordable housing into a tangible reality.
Meanwhile, home loan borrowers are optimistic about a potential rise in deduction limits, which would make home loans more affordable.
At present, individuals who have taken out home loans are eligible to claim a deduction of up to Rs 2 lakh annually for the interest paid, as stipulated under Section 24(b). However, this limit has remained unchanged since 2014 and does not adequately address the issue of affordability, particularly in light of the rising property prices, even in smaller urban areas.
Introducing separate limits for principal repayment deductions or enhancing the current ones can provide significant relief to borrowers, particularly for salaried individuals who are restricted by other statutory contributions.“The housing market, currently valued at more than $300 billion and anticipated to grow to $5.8 trillion by 2047, is at a critical turning point. Although 2024 experienced a minor decline in sales after three consecutive years of robust growth, the industry is hopeful that the forthcoming Budget may serve as a crucial driver to stimulate demand, especially in the affordable housing sector, thereby accelerating the long-term expansion of the industry,” added Khandelwal.
